Tuesday, February 7, 2012

Sold Mpel At $11.71 for A Profit of $3,000

Yesterday I have sold Melco Crown Entertainment ("Mpel") for a profit of only $3,000. Initially, I was up by $5,000 but now my realized profit was halved to $3,000. It is a good decision that I have sold it off? This is a question that came on and off in my head after I have sold it. Do I regretted it? Maybe, but there are solid reason for my action. My reasons are:-
1) I cannot afford to lose in any one trade, in other words, I must win 100%.(due to my personal commitment)
2) I was wrong in predicting that Mpel has broke the important resistance at $12.00, in fact the important resistance was not broke, Mpel merely flirted with it for a brief interval.
3) The China Stock Exchange under "SSE" continues to tumble downward with due to news on China Economy slowing down. With today tumbling more than 1.68%. (Please refer to the chart of SSE at the bottom of this post)
4) DJIA has met the important and all time resistance of 12,800 which is at current level. (Please refer to the chart of DJIA at the bottom of this post)

Yesterday closing at $11.66 which lost around 3.44% has prompted me take take immediate action to sell Mpel. I have no choice because Mpel did not move as per my earlier prediction. I have predicted that Mpel will continue to move up ahead after crushing the important resistance at the $12 level. The 1 down long red candlestick is also a very bearish sign. It indicates that Mpel will continue to face more resistance in the coming future. I also believe that the coming earning announcement in Feb 9 which is three days from today, will not be good. If it is good, then Mpel stock will have move up these few days as insider trading will have move the stock upward. If you tell me there is no insider trading in the market, you probably do not understand the wicked world of stock market, my best advise is for you to watch the movie Wall Street "Money Never Sleeps". Insider trading is rampant, I believe Mpel will not be an exception to it.

Now, lets bring Wynn into the picture on why I have sold Mpel.

Firstly, if you would have look at the recent quarterly earning of Wynn, even though, it has crushed analyst prediction by a whopping 20% more, the stock is only up by around 2%, and then go downhill all the way afterward.

By right, if Wynn is beating the analyst estimates with a whopping 20%, Wynn stock should be moving up all the way. However, instead of going up, it is going down. There is definitely something fishy going on here. I believe that the fund manager, stock operators, and block traders know something that we don't know. It may be due to the slowing casino revenue growth in Macau which have yet to be reported. Anyway, it makes me think that what if Mpel reported growth in earning in the coming quarters, but Mpel is going nowhere, just like Wynn. Or to make matter worst, Mpel may report earning below analysts estimates, and it will send the stock down tumbling more than 10%. Either up or down on Mpel quarterly earning, it looks like Mpel stock is not going anywhere but down as per the example from Wynn.

Based on the simple long term chart of DJIA, DJIA has meet the important resistance at the current level. To break this resistance might be a miracle as I believe this long multi years resistance is a tough job to break.

To wrap things up here, I have sold Mpel for a profit of $3,000 and I wont be regretted by my action even Mpel will continue to move upward after today. In the past, I have always make mistake and lost lots of money due to my greediness of always wanted to make more money. However, sometimes, it is not worth the risk, in this case, for my Mpel trade, it is definitely not worth the risk to hold Mpel for the coming short term, as the overall market is very volatile now, a bad news from Europe of Asia can sent the world stock markets down and the whole world back into recession.

I have sold all the stock that I have invested in Mpel. I am currently 100% in cash position. I may initiate purchase in Mpel stock once it move down to the strong support at $8.50 level.

Last but not least, I would like to thank the our regular visitors, Dale and Zoozoocracker1@yahoo.com for their kind suggestion and advised on my Mpel trade.

1 comment:

  1. Congrats on another successful trade, Edmond...

    You are correct, about the likelihood of the weakening of the ChiCom market..I personally suspect, it will either go into a formal recession or a significant GNP decline...

    Several informed investors have been giving out red flag warnings of the Red Chinese market, especially its construction industry, which is much too large for its economy...

    The stock result for Wynn is also deeply troubling, as the common should of had an excellent bump that day...

    That was indeed a fine observation by you!


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